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OECD Publishes Compliance Review for All Non-compliant Jurisdictions

July 21, 2017

The OECDs global tax transparency initiative was launched last year in April 2016, with the purpose of encouraging every jurisdiction across the world to commit to implementation of a CRS (Common Reporting Standard) for automatic exchange of information by 2018, and to sign the Multilateral Convention on the exchanging of tax data. A forum on behalf of the OECD has released the results of its review for jurisdictions it considers to be non-compliant.

Original source: http://old.eltoma-global.com/knowledge-base/oecd-publishes-compliance-review-for-all-non-compliant-jurisdictions.html
Any jurisdiction failing to meet these targets, as determined by the necessary criteria, in time for this year’s G20 summit, would be put on a blacklist of non-cooperative jurisdictions, and possibly made the target of defensive measures by OECD countries.

The blacklist criteria were duly published in July 2016, and formally approved by G20 leaders at the summit in China on September 5th 2016. In the first round of the project, the OECD has now applied the criteria to the 15 jurisdictions it regarded as lagging behind in the move to transparency.

The OECD says huge progress has been made by many member jurisdictions towards exchange of information on request in the last 15 months since the launch of the project, with substantial changes being noted such as:

  • The abolition of bank secrecy laws and anonymous bearer shares,
  • Improving access to accounting records especially for cross-border usage.
  • Introducing stricter oversight and enforcement of responsibilities to conserve information.

The following jurisdictions are viewed as being largely compliant:

  • Andorra.
  • Antigua and Barbuda.
  • Costa Rica.
  • The Dominican Republic.
  • Guatemala.
  • Micronesia.
  • Lebanon.
  • Nauru.
  • Panama.
  • Samoa.
  • The UAE.
  • Vanuatu.

With the Marshall Islands being considered to be “partially” compliant. Trinidad and Tobago is the only jurisdiction still with a “non-compliant” rating, and the OECD stresses that progress with the non-compliant jurisdictions is anticipated soon. Even the US is considered compliant, even though they originally rejected the CRS standards in favour of its own legislation known as FATCA (Foreign Account Tax Compliance Act) system.

However, the significance of the announcement goes beyond these successes. The OECD in its briefing paper stressed that its assessment process is entirely separate from the soon-to-be-published European Commission blacklist, being based on its own independent criteria.

Some experts say this is a criticism of the EU blacklist, which is expected to be released shortly and officials predict it to be far from independent or objective. It will be applied only to non-EU jurisdictions and based on the EU’s own approach to tax good governance criteria, which could result in blacklisting jurisdictions with zero corporation tax rates.

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